The tax-exempt market started the week off on a firm tone, following Treasuries, as light supply in the market pushed prices higher.

"I would say it's one or two basis points stronger," a New York trader said. "It's partially just following the rally in Treasuries. And supply this week is light so people feel like it's affordable to hold onto bonds."

He added 10-year bonds are one to two basis points better.

One market participant said supply this week is still manageable, although it is greater than last week's supply. "This week will have more new issuer paper [but] it is still manageable," wrote Dan Toboja, vice president at Ziegler Capital Markets. "Even though ratios this morning are all inside or near 90%, the large inflows, the limited supply, and the morning rally in Treasuries all suggest we're not likely to see a cheapening today."

In the primary market, Bank of America Merrill Lynch is expected to price for retail $343.2 million of tax-exempt and taxable bonds for the Louisiana Stadium & Exposition District. Institutional pricing is expected Tuesday.

The deal will consist of $297 million of tax-exempt securities and $46.2 million of taxable bonds.

On Friday, the Municipal Market Data scale ended steady to slightly higher. The 30-year yield fell three basis points to 2.77%. The two-year closed steady at 0.34% for the third trading session while the 10-year closed flat at 1.70% for the second session.

Treasuries were stronger Monday morning. The benchmark 10-year yield and the 30-year yield fell three basis points each to 1.84% and 3.02%, respectively. The two-year yield fell one basis point to 0.25%.

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